Background
A creditor of a Chinese joint venture (JV) initiated arbitration
against the JV's shareholders, arguing that it had not been
properly informed of the company's liquidation and that the
shareholders should be held jointly liable for the JV's debts.
The arbitration tribunal accepted this claim and issued an award
holding the shareholders liable for nearly CNY 15 million.
Court Proceedings
The award was challenged in court on the grounds that the
arbitration clause did not bind all shareholders, since not all
parties had agreed to arbitration. The argument centered on the
principle of party autonomy a fundamental concept under
Chinese law that parties cannot be forced into arbitration without
their consent.
